Bad Credit Loans Online – Bad Credit Loans Online – Moratoriums Pose Risks for Asean Banking Systems Zoom Fintech | Zoom Fintech

Bad Credit Loans Online – Bad Credit Loans Online – Moratoriums Pose Risks for Asean Banking Systems Zoom Fintech

PETALING JAYA: Moratoriums on loans and restructuring pose critical risks to banking systems in Asean, including Malaysia, and should be monitored in the future, according to Maybank Kim Eng Research.

The research house said loan moratoriums and restructuring across Asean had blurred the lines on asset quality risks.

“Only 10% of these overdue loans could have a significant impact on non-performing loans (NPLs), particularly in Indonesia, Thailand and Malaysia, but also in Singapore and the Philippines. This is a critical risk that must be closely monitored, ”Maybank Kim Eng said in a report.

As part of the extraordinary Covid-19 relief measures, many regional banking systems have granted loans on moratoriums where interest and / or principal payments are suspended. These loans are not classified as nonperforming loans.

“This leads to a quality risk of phantom assets, we believe. The banking systems of Thailand, Indonesia and the Philippines have the highest proportion of restructured / moratorium loans, our data reveals, ”the research house said.

“In our coverage universe, if 10% of these loans were to ultimately be classified as non-performing, Indonesia (+ 66%), Malaysia (+ 43%) and Thailand (+ 31%) could experience the highest growth in nonperforming loans compared to forecasts. 2021 fiscal year levels (FY21). Singapore (+ 29%) and the Philippines (+ 26%) also present significant risks, ”he added.

In such a scenario, Maybank Kim Eng predicts significant increases in gross NPL ratios in Indonesia, Philippines and Thailand, which will ultimately have a significant impact on profits and losses through higher credit charges.

Maybank noted that throughout FY20, banks increased their allowances, with loan loss allowance (LLP) coverage near or above 100% in most markets.

He added that LLP could drop 100 percentage points (ppt) in Indonesia and 33 points in Malaysia. In the rest, it could fall between 14 and 23ppt.

Regionally, Maybank Kim Eng expects pre-provisioning operating profits to improve in 2021, largely due to improved loan growth as economic activities strengthen and countries expand. open.

“At the same time, we expect non-interest income to also experience some recovery from lock-in periods in 2020, particularly in banks with strong wealth management and asset management franchises. funds as well as commercial income, ”he said, adding that he plans. economic growth to provide positive readings in 2021 compared to most contractions in 2020.

From a valuation perspective, Maybank Kim Eng said the regional sector has been lifted from deep value territory after the recent rally. Its top picks are Hong Leong Bank Bhd, RHB Bank Bhd, Kasikornbank, TISCO Financial Group, DBS, OCBC, VPBank, Techcombank, Bank Mandiri, and Bank BJB.

Regarding Malaysia, Maybank said its economics team is no longer forecasting a rate cut in 2021.

“As a result, we charged a reversal in net interest margins (NIM). Positively however, banks have accumulated significant fair value through other comprehensive income reserves, supported by unrealized investment gains, which may be partially realized to support results in 2021.

“Bank Negara’s stress test forecasts an increase in the gross impaired loans (GIL) ratio of the banking system to 3.1% at the end of 2020, from 1.6% at the end of June 2020 and to 4.1% in 2021. As a result, credit costs are expected to remain high until 2021.

“We expect ROE to improve to 8.6% in 2021, but will continue to track the over 10% average in 2019, unless earnings growth is much stronger than we expect. currently, ”he said.

Bad Credit Loans Online – Bad Credit Loans Online – Moratoriums Pose Risks for Asean Banking Systems Zoom Fintech

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